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Deccan Aviation on verge of closing US$75-$100m fund-raising deal

Deccan Aviation Ltd., which runs budget carrier Air Deccan, is soon expected to raise US$75-$100 million from private equity investors, according to media reports in India.

The Anil Dhirubhai Ambani group and Texas Pacific Group are among potential investors, the Economic Times daily reported quoting investment banking sources. The publication reported: Sources close to the matter said that the investor is likely to put in roughly $100 million into the airline, shoring up the airline's depleted cash position.

“Sources close to developments also said that Air Deccan was very keen to find an investor that would have an alignment of vision with the airline on the way ahead. For instance, the airline was very keen to spin off various divisions like cargo, MRO (maintenance and overhaul organisation) and a helicopter charter unit into separate companies. These would eventually be spun off to unlock value for the company. The management was obviously keen to make sure it had a partner that saw things in the same light,” it added.

“What we are trying to see is what kind of money people are willing to invest and under what kind of conditions,” the Mint daily quoted Deccan's Managing Director G.R. Gopinath as saying.

As per the information available, the airline had raised $100 million late last year from two European lenders by pledging the right to buy 60 Airbus planes it ordered. It has received $60 million, and will receive another $40 million in two instalments in November 2007 and February 2008. In June 2006, Deccan raised $83 million through an IPO. Prior to that, the budget carrier had placed equity worth $40 million with ICICI Ventures and private equity firm Capital International, which specialises in investing in aviation stocks.